Apple (NASDAQ) has proposed a $100 million investment in Indonesia to establish an accessories and components manufacturing plant, according to the country's Industry Ministry. The move follows a ban on sales of Apple's iPhone 16 due to the company's failure to comply with Indonesia's local content requirement, which requires 40% of smartphone components sold in the country to be produced locally.
The proposed facility in West Java signals Apple's intention to align with regulation and regain market access in Southeast Asia's largest economy. The Industry Minister's upcoming meeting on Thursday underlines the government's openness to Apple's commitment.
Apple's current presence in Indonesia includes app developer academies established since 2018, with investments totaling approximately Rp1.6 trillion ($99 million). This latest proposal would mark Apple's first manufacturing presence in the country, showing its willingness to deepen its ties with local industries.
The ban is not unique to Apple; Alphabet (NASDAQ) has faced similar restrictions for failing to comply with the same regulation. These challenges highlight Indonesia's growing drive to boost its domestic manufacturing capabilities and reduce dependence on imports.
Apple's response to these regulatory hurdles could set a precedent for other global tech companies seeking to operate in the region, balancing compliance with local laws while maintaining competitive advantages in emerging markets.
Apple stock chart
Apple (AAPL 0.11%) remains a dominant force, with a market capitalization hovering around $3.4 trillion after peaking at $3.6 trillion. For the tech giant to reach a $4 trillion valuation, its stock would need a gain of 18%, something potentially achievable given its 17% rise this year and stable financial performance.
In the fourth quarter of fiscal 2024, Apple reported $95 billion in revenue, a 6% year-over-year increase, and Wall Street projects mid-single-digit growth going forward. Earnings per share are expected to rise modestly, although Apple Intelligence's impact on future results remains uncertain.
The assessment, however, raises questions. Trading at 37 times trailing 12-month earnings (above its five-year average of 29), Apple shares may be overvalued, creating near-term risks. While the company's dominance justifies a premium, its high valuation and recent declines could signal caution to investors. Despite this, Apple's steady growth trajectory keeps its $4 trillion milestone within reach.
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